Conserv-Vision Conference Proceedings
Th e U n iv ersit y of W aikat o
A CELEBRATION OF 20 YEARS OF CONSERVATION BY
NEW ZEALAND’S DEPARTMENT OF CONSERVATION
CONFERENCE PROCEEDINGS EDITED BY:
Dr Bruce Clarkson, Dr Priya Kurian, Todd Nachowitz, & Dr Hamish Rennie
© 2009 Mark Christensen & Sarah Barnes
Article Title: “Biodiversity Offsets and Environmental Compensation in New Zealand: Where to
from here?”
Author(s): Mark Christensen & Sarah Barnes
Publication Date: 7 August 2009
Source: Proceedings of the Conserv-Vision Conference, University of Waikato, 2-4 July 2007
Published by: The University of Waikato, Private Bag 3105, Hamilton, New Zealand
Stable URL: www.waikato.ac.nz/wfass/conserv-vision
Pr o ce e d i n g s o f t h e C o n s e r v - V i s i o n C o n f e r e n c e • T h e U n i v e r s i t y o f W a i k a t o
w w w . w a i k a t o . a c . n z / w fa s s / C o n s e r v - V i s i o n
Mark Christensen and Sarah Barnes
Biodiversity Offsets and Environmental Compensation in New Zealand:
Where To From Here?
Mark Christensen and Sarah Barnes
Anderson Lloyd Lawyers
PO Box 13831
Christchurch 8141
New Zealand
email: <[email protected]>
email: <[email protected]>
Abstract
There has been increased interest in the use of voluntary biodiversity offsets as a means of
compensating for harm to biodiversity arising from development projects. This paper
takes a 2004 monograph on the subject of offsets as its starting point and examines judicial
consideration of offsets by the New Zealand Environment Court since 2004. The author
concludes that while some of the decisions provide guidance, the application of offsets
continues to be variable and ad hoc and that this is best resolved by some kind of guidance
from central government. In order to identify a way forward the paper reviews recent
developments in the use of offsets in other jurisdictions including New South Wales,
Victoria, South Australia and South Africa. Finally the paper considers how New Zealand
may move forward in the development of biodiversity offsets.
Key words: biodiversity, biodiversity offsets, development, environmental
compensation, New Zealand
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Biodiversity offsets and environmental compensation in New Zealand: Where to from here?
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Introduction
Biodiversity offsets are conservation actions intended to compensate for the residual,
unavoidable harm to biodiversity caused by development projects, so as to ensure no net loss
of biodiversity. Before developers contemplate offsets, they should have first sought to avoid
1
and minimise harm to biodiversity .
Recent experience with regulatory regimes, such as wetland and conservation banking in the
USA, tradable forest conservation obligations in Brazil, and habitat compensation requirements
in Australia, Canada and the EU, has been supplemented by growing interest in the potential
of voluntary biodiversity offsets.
2
In July 2004 a research monograph examined the statutory context for, and the emerging
practice of, biodiversity offsets and environmental compensation under the RMA. It
considered the use of offsets and environmental compensation in a number of jurisdictions and
3
compared the practice in those jurisdictions with the New Zealand situation. The monograph
concluded that the practice of environmental compensation in New Zealand is ad hoc and
variable and needs to be put on a sounder footing. It recommended a cautious approach to the
use of environmental compensation and stated:
Our conclusion is that a far more robust regime needs to be developed in New Zealand
if environmental compensation is to be used to protect significant biodiversity and
landscape values. At present, we appear to be learning as we go rather than learning
from the best and worst of international practice. Central government should provide
not only more explicit policy direction but should also promote good practice
guidelines. This is imperative in order to improve the quality of policies and rules for
environmental compensation in second-generation planning instruments (including
the New Zealand Coastal Policy Statement).
4
This paper notes developments since July 2004 in the use of the concept of biodiversity offsets
(and environmental compensation generally), both in New Zealand and internationally. We
1
IUCN (The World Conservation Union)¸ Biodiversity Offsets: Views, experience and the business case,
November 2004 (www.iucn.org/themes/business/Biodiversityoffsets). This definition, while widely
accepted, is but one of a range of definitions of biodiversity offsets or green offsets. There remains
considerable debate about the appropriate definition and scope of biodiversity offsets.
2
Borrie, N. Memon, A., Skelton, P. (July 2004) An International Perspective on Environmental Compensation:
Lessons for New Zealand's Resource Management Regime. Research monograph. Environment, Society and
Design Division Lincoln University, Christchurch, New Zealand.
3
Principally Arrigato Investments Limited v Rodney District Council [2000] NZRMA 241; Transit New Zealand
v Auckland Regional Council (Environment Court, Auckland A100/2000, Judge DFG Sheppard, 18 August
2000); Rutherford Family Trust v Christchurch City Council (Environment Court, Christchurch C26/03, Judge
JR Jackson, 21 March 2003); Memon & Others v Christchurch City Council (Environment Court, Christchurch
C116/03, Judge JR Jackson).
4
At 8.5, page 38
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consider the extent to which concerns raised in the 2004 monograph have been addressed, and
suggest possible ways forward in New Zealand.
Judicial consideration in New Zealand under the Resource Management Act
The 2004 monograph discussed a number of decisions of the Environment Court that
considered the use of offsets and compensation. The paper’s conclusion was that the
Environment Court has struggled to deal with matters related to environmental compensation,
as a direct consequence of policy ambivalence. Since July 2004, the Environment Court has
further discussed the legal and policy foundations of biodiversity offsets, generally under the
rubric of the more general concept of “environmental compensation”.
5
In Stapylton-Smith v Banks Peninsula District Council the applicant sought subdivision consent
to create three lots in a rural part of Banks Peninsula. The applicant proposed vesting one lot
(with conservation values) in the community by way of offset or compensation. The Court
noted that the fundamental difficulty with the concept of environmental compensation in this
context is how one translates the adverse effect on natural character, outstanding landscape
and visual amenity into the benefits that are achieved by having greater recreational access or
possible native revegetation. It contrasted the situation with one where it is possible to replace
biodiversity by compensating with similar biodiversity, such as restoration and rehabilitation,
6
to try and achieve the same diversity and representation of species.
The Court stated that the concept of compensation for out of kind (dissimilar) values is far
more difficult:
As this Court has commented on numerous occasions, it is not possible to directly
equate one particular type of value with another, i.e. the loss of natural character with
improved public access. Although both matters are ones recognised under Section 6 of
the Act, this cannot in itself mean that they are always equivalent. There is no
accounting process that can be adopted to measure some form of economic
equivalence, i.e. 1000 trees for one hectare of access.
7
The Court was not concerned whether the lot to be set aside was characterised as mitigation or
environmental compensation:
In our view nothing particularly turns on the way in which Lot 2 is presented. It can
either constitute an element of mitigation of the recognised adverse visual effects and
5
Environment Court, Christchurch C191/04, Judge JA Smith, 17 December 2004.
Para 91.
7
Para 92.
6
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effects on natural character and outstanding landscape or it could fit within the more
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generic description of environmental compensation.
The Court went on to adopt the comment of the Environment Court in Memon and others v
9
Christchurch City Council about when compensation might be appropriate:
Reflecting more on this, it seems to us that useful tests as to whether the environmental
compensation may be sufficiently linked to a development proposal are that it should,
so far as possible, be:
(1)
A similar area of land or water of comparable conservation (e.g. ecological,
landscape or tangata whenua) worth to what is being developed so the
questions of how to compare quantifiable value with non-quantified value do
not have to be answered; and
(2)
Managed so as at least to maintain and usually to restore or improve the
qualities which it is being conserved for; and/or
(3)
Protected in its ownership usually by vesting it in the local authority (or
perhaps a trust) or under binding covenants/consent notices registered against
titles (at the time of subdivision).
Taking all of the matters into consideration, the Court found that the proposal did not
represent sustainable management and consent for the subdivision was declined.
10
In Mabey v Thames Coromandel District Council the Court considered an offer of a wetland
conservation area as offset or compensation for an undersized lot in a proposed subdivision.
The District Plan provided for conservation lots, however it did not explain the reasons why
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there was such a provision. The Court stated :
There is reference to preserving and/or enhancing areas of indigenous vegetation and
indigenous wildlife habitats, including the promotion of ecosystem completeness and
habitat continuity. This clearly includes conservation lots but … we are left without
further guidance as to the intellectual approach to, or relative value of, these
conservation lots in the exercise of the discretion. Thus although this approach may be
susceptible to analysis in terms of the research monograph of A Memon, P Skelton and
N Borrie’s An International Perspective on Environmental Compensation (July 2004, Lincoln
University), we have inadequate information in the Plan.
8
Para 96.
Ibid.
10
Environment Court, Christchurch A017/2005, Judge JA Smith, 3 February 2005.
11
Paras 10-11.
9
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In the absence of clear direction from the Proposed Plan there are many ways this
conservation lot may be described: as a quid pro quo, enhancement, environmental
compensation, a bio-diversity offset, mitigation or as a trade-off. When we refer to the
approval of an undersized lot on the basis of acceptance of a legally protected area for
conservation purposes, as a natural asset for the community, we will use the vernacular
phrase trade-off for that lot. In doing so we do not derogate from the approach of other
cases or recent analysis, but use the term to encompass all such possibilities.
The Court decided that the development, together with the 10 ha conservation lot and other
mitigation, would not have a significant adverse impact on the natural character of the coastal
environment, and granted consent.
12
In Solid Energy New Zealand Limited v West Coast Regional Council , a proposed open cast coal
mine would disturb part of the habitat of kiwi and a native land snail. In order to mitigate
these effects, the applicant proposed the creation of a predator-proof reserve of some 17 ha; an
extensive predator control programme in a wider area; ongoing monitoring and management;
and research on snails’ habitat, feeding requirements and breeding. The Court noted that in
considering the value of these measures the parties had deliberately not attempted to
differentiate between the minimisation, mitigation and compensation. In general terms the
13
Court used the word mitigation to cover all these possibilities.
In concluding that consent should be granted, the Court stated:
We have also concluded that the lowering of predators generally within the area and
the predator-proof area will bring about an overall reduction in the predation of both
kiwi and patrickensis in the short to long term. Combined with the other management
plan steps, including identifying preferable habitats and food sources for patrickensis,
we have concluded on the balance of probabilities that these programmes will be
successful. In other words, that they will achieve both enhancement of the numbers
and habitats of those particular indigenous species…
Earlier in this decision we have considered effects on the habitat of the great spotted
kiwi and Powelliphanta “patrickensis”. We accept that habitat will be lost, but we found
that the protection from predation in other areas offered by the applicant will afford
benefits to these species which compensate for the loss of habitat.
14
12
Environment Court, Christchurch C074/05,Judge JA Smith, 24 May 2005.
Para 61.
14
Paras 135, 190.
13
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On appeal, the High Court confirmed the Environment Court’s decision . The appellant had
argued that Solid Energy’s proposals did not mitigate the loss of habitat, in the sense that it
was minimised. Instead, the appellant argued that the mitigation plans were in essence an
“off-site” environmental benefit by way of a trade-off to compensate for the loss and, therefore,
not within the terms of s 5(2)(c) of the Act. The High Court stated:
… Although, as Mr Reid argued, the exclusion and control areas are either wholly or
partially beyond the mined area itself, it seems to me artificial to characterise them as
“offsite” proposals. The exclusion area must necessarily be offsite, but nearby, so that
the populations of kiwi and partrickensis can be transferred to it. The much larger
control areas are also necessarily “offsite” to a major degree, since in terms of size they
significantly exceed the area of the proposed mining activity. But, thereby, it does not
16
seem to me that these measures are properly characterised as offsite compensation.
Moreover, the Court indicated that the distinction between mitigation and compensation was
of no significance in the situation before it:
Standing back and assessing the proposals in the round with reference to their
potential effects on kiwi and patrickensis, the Court’s findings are to the effect that the
populations in the Waimangaroa area will probably be enhanced in the long term.
Regardless that this outcome may be described as one achieved by compensatory
measures, it is nonetheless a valid and significant consideration which the Court was
entitled to bring to account.
17
18
19
In Whangamata Maori Committee et al v Waikato Regional Council the Court recommended that
resource consent for a new marina be granted on condition that remedial works be carried out
upstream of estuary site. The Waikato Regional Policy Statement provided for avoiding,
remedying or mitigating adverse effects through a variety of means including appropriate
offsite mitigation:
The Regional Policy Statement] reveals a flexible approach for protecting bio-diversity
areas, including, where appropriate, through remediation or mitigation measures
where adverse effects cannot be avoided. In this instance, the marina proposal is
dependant upon infilling of the salt marsh area previously discussed, but we hold that
suitable remediation is to be undertaken in the vicinity of the site so as to maintain and
protect the area’s biodiversity and coastal wetland system by looking to provide for a
15
Royal Forest and Bird Protection Society Inc v Buller District Council, , (High Court, Christchurch CIV 2005485-1240, Panckhurst J, 21 December 2005).
16
Para 88.
17
Para 90.
18
Environment Court, Auckland A173/2005, Judge Bollard, 26 October 2005.
19
Since the marina is a restricted coastal activity, a recommendation is made to the Minister of
Conservation.
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wetland area of comparable size and nature via the reinstatement and enhancement
programme proposed by the society and endorsed by both the regional and territorial
bodies.
20
The most recent and most comprehensive discussion of environmental compensation is JF
21
Investments Limited v Queenstown Lakes District Council . There, the Environment Court was
considering an application for a land-use consent for a residential platform situated in an
outstanding natural landscape in the Queenstown District. In compensation for the proposed
location of a house in that landscape, the applicant offered to remove wilding pines from the
uphill half of its site, to carry out work up to the value of $100,000 removing pines from
elsewhere in the surrounding landscape, and proposed covenants not to further subdivide the
allotment, nor to place additional houses on it in the future.
The Court began by defining environmental compensation as:
Any action (work, services or restrictive covenants) to avoid, remedy or mitigate
adverse effects of activities on a relevant area, landscape or environment as
compensation for the unavoided and unmitigated adverse effects of the activity for
22
which consent is being sought .
It then provided a comprehensive review of earlier judicial discussions of environmental
compensation. After discussing the decisions in Di Andre Estates Limited v Rodney District
23
Council and Arrigato Investments Limited v Rodney District Council, the Court stated :
Like most Environment Court decisions, Arrigato does not refer to environmental
compensation as such; rather it refers to ‘incentives’ and ‘enhancement’. Despite that
the decision has been criticised as allowing a resource consent to be purchased.
Professors Ali Memon and Skelton with Ms N Borrie write in their research
monograph, An International Perspective on Environmental Compensation: Lessons for New
Zealand’s Resource Management Regime:
... Perhaps the major difficulty with [Arrigato] ... is that the perceived adverse
effects of the proposed subdivision (additional houses in a coastal
environment) had no connection with the existing degraded landscape.
Consequently, it is not really a case about environmental compensation as
understood internationally but rather a case about trading off one value for
another or as some might see it “buying” a resource consent.
20
Para 73.
Environment Court, Christchurch C48/2006, Judge JR Jackson, 27 April 2004.
22
Ibid at para 8.
23
Paras 13, 14.
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Unfortunately that issue was not raised in the appeals to the High Court and Court of
Appeal in Arrigato. Nor is that part of the International Perspective paper consistent
with its earlier description of international practice where off-site compensation is
discussed at some length as environmental compensation, e.g. the USA’s ‘mitigation
banks’ whereby development of one wetland is mitigated by protection of another
elsewhere.
Counsel did not refer us to them but we are aware that there are other cases where
environmental compensation was assessed by the Environment Court although the
remedial or enhancement work was not identified as such. For example, in the
Waipara landfill case — Transwaste Canterbury Limited v Canterbury Regional
Council — the Court allowed preparation for a new landfill site to remove areas of
remnant lowland forest, in return for increased protection and maintenance of other
larger and hence ecologically more desirable remnants, as part of 400 hectares of land
being turned into a conservation area. The Court concluded:
Overall the application has been presented to the Court as a package.
Discernable benefits to the wider environment of Kate Valley and to the region
as a whole are proposed as part of this total package. Thus in any
consideration under Part II and in the integration necessary under section 5,
these benefits are advanced as a critical feature.
The Environment Court concluded that it is not uncommon for the Environment Court to allow
some adverse effects, even on matters of national importance, if there are sufficiently useful
and appropriate offsetting or remedial works.
24
The JF Investments decision is significant because it was the first time the Environment Court
had attempted to analyse previous discussions about incentives, offsets and compensation and
distill some principles for the application of environmental compensation under the Resource
Management Act.
One of the concerns raised in the 2004 Monograph was whether the RMA provided adequate
legislative basis for the adoption of environmental compensation. In JF Investments, the Court
found, first, that the concept was embodied with the sustainable management purpose of the
RMA, being within the wider definition of a 'remedy'.
24
25
25
Para 17.
Paras 20 and 21.
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In addition, the concept was consistent with the wider definition of “effects” in the RMA:
The very wide and inclusive definition of ‘effects’ in section 3 of the Act suggests that
effects in section 5(2)(c) may be (in addition to the characteristics specifically
mentioned) direct or indirect, simple or confused. Further, observed ‘effects’ may have
multiple causes. Water and air pollution are classic examples: who can say from which
farm downstream bugs (faecal coliforms) come, or which fireplace or car is emitting
particles to the air? Since the RMA recognises such causal complexity we consider it
also contemplates complex solutions to achieve better overall environmental
outcomes.26
The Court also found that section 5(2)(c) can be interpreted widely to allow for application of
the concept:
The final part of section 5(2)(c) should also be read in a broad way. First, the
remedying of adverse effects of ‘activities on the environment’ in section 5(2)(c) does
not only refer to effects caused by the activity for which a resource consent is sought.
We hold that the phrase refers also to adverse effects of other, including past, activities
on the site and offsite on neighbouring parts of the relevant environment, area or
landscape. Secondly, and more importantly ‘environment’ is very widely defined in
the Act. Most human activities involving natural and physical resources could be said
to have some positive effects on the ‘environment’. In every decision under the Act a
choice or compromise is almost always made between limiting the economic and social
conditions of people by avoiding the adverse effects of their activities or enabling
individual’s wellbeing by allowing some adverse environmental effects to occur, duly
remedied or mitigated to the appropriate extent. Environmental compensation is one
type of choice or compromise.27
After discussing sections 6 and 7 of the RMA which supported this interpretation of section 5,
the Court concluded:
Every applicant for resource consent is entitled to have their application considered on
the basis that if the positive effects of the proposed activity outweigh the adverse
effects of that activity when they are weighed in the light of all relevant objectives and
policies and with the appropriate multipliers … then they should be granted consent
unless in the particular case the objectives and policies of the relevant plan, or Part 2
matters trump everything. However, if an applicant fears that consent will be refused
because some of those matters will not be satisfied — then under the enabling and
26
27
Para 22.
Para 23.
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efficiency provisions of Part 2 of the Act he or she can offer environmental
compensation to add to the positive benefits of their proposed activity.28
The Court then turned to section 104 of the RMA and discussed whether environmental
compensation was a matter it could take into account as being a matter it considers relevant
and reasonably necessary under section 104(1)(i) (now section 104(1)(c)).
It held that the ultimate question for a consent authority on any application for resource
consent is to determine whether granting or refusing consent better achieves the purpose of the
Act. Part of that determination involves resolving whether adverse effects of activities on the
relevant environment are being appropriately avoided, remedied or mitigated. It concluded
that consideration of environmental compensation — being remedying of adverse effects of
other activities than that for which consent is sought — may be, to a greater or lesser extent
depending on factors we identify shortly, reasonably necessary to the ultimate determination.
29
These conclusions were the only ones available to the Court. The principle that everything
under the RMA is guided by its purpose and the requirement to avoid, remedy, or mitigate
adverse effects are so well entrenched in resource management jurisprudence that any
development in the law has to be framed in those terms.
In the Court's view, the context of section 104(1)(i) was important to the issue of whether
environmental compensation can be considered. It noted that there is a continuum of remedial
or mitigating actions that may be appropriate. A payment of compensation to persons
30
adversely affected may, in unusual circumstances, be the best remedy.
While the Court accepted that how to value environmental compensation is very complex it
stated that this should not of itself prevent the assessment being attempted:
The difficulties of obtaining such (e)valuations must not prevent the attempt if
sustainable management of resources requires it. The practical answer is usually that if
the proposed remedial or mitigatory action is the repair of damage of the same kind as
the adverse effects of the activity, it is easier to accept as not only relevant, but
reasonably necessary as well. Similarly, if the proposed remedy is also in the same
area, landscape, or environment, then its benefits, compared with the costs of the
proposed activity, are more easily seen. Conversely, if the offered environmental
compensation is too far in distance, kind or quality from the adverse effects caused by
28
Para 30.
Para 35.
30
Para 36.
29
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the proposed activity then it may be no longer reasonably necessary, but merely
expedient for the developer to offer.
31
The question of weight to be placed on the compensation needs to be decided on the facts of
each case, and where compensation is found to be inadequate consent could be declined. In
providing guidance on when environmental compensation might be appropriately considered,
the Court concluded:
We conclude that off-site work or service or a covenant, if offered as environmental
compensation or a biodiversity offset, will often be relevant and reasonably necessary
under section 104(1)(i) if it meets most of the following desiderata:
(1)
it should preferably be of the same kind and scale as work on-site or should
remedy effects caused at least in part by activities on-site;
(2)
it should be as close as possible to the site (with a principle of benefit
diminishing with distance) so that it is in the same area, landscape or
environment as the proposed activity;
(3)
it must be effective; usually there should be conditions (a condition precedent
or a bond) to ensure that it is completed or supplied;
(4)
there should have been public consultation or at least the opportunity for
public participation in the process by which the environmental compensation
is set;
(5)
it should be transparent in that it is assessed under a standard methodology,
preferably one that is specified under a regional or district plan or other public
document.32
The decision in JF Investments is the most comprehensive discussion of environmental
compensation to date in New Zealand. Since the 2006 decision there has not been any attempt
by the Court to take the concept further.
While the decision in JF Investments is useful it is not a binding statement of the law because
one division of the Environment Court is not bound by the decision of another. It is only when
environmental compensation is considered by a higher court or (more likely) is the subject of
some form of central government policy statement that the concept of environmental
compensation will be developed further.
It is the writer’s view that central government guidance is preferable to avoid the ad hoc
development that has occurred to date.
31
32
Para 37.
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Recent developments in other jurisdictions
The 2004 monograph surveyed the use of environmental compensation and biodiversity offsets
in a number of countries.
33
This part of the paper notes significant developments in policy and
law in those other jurisdictions since July 2004.
New South Wales, Australia
In December 2006, the Threatened Species Conservation Amendment (Biodiversity Banking)
Act 2006 commenced. This Act establishes a biodiversity offset and land banking scheme by
which the NSW Government intends to introduce a market-based approach to addressing the
impacts of development on biodiversity. The scheme recognises that biodiversity offsets were
being negotiated on a case by case basis, which was leading to considerable uncertainty.
The biodiversity offset and land banking scheme offers landowners an opportunity to earn
credits for creating sites which maintain or improve biodiversity. Developers can then
purchase those credits from a central register and use the credits to offset the negative impact
of development on biodiversity.
The scheme is subject to a state-wide two-year trial starting in September 2007, and a formal
review. If it goes ahead, the scheme is expected to commence around September 2009 and
participation will be voluntary. The Threatened Species Conservation Amendment
(Biodiversity Banking) Act establishes the framework for the scheme but many of the
operational details and rules to support the framework are yet to be developed. It is
anticipated that many of these will be developed during the trial period, in consultation with
stakeholders and participants.
Biobanking sites may be established on land by means of biobanking agreements entered into
between the Minister for the Environment and a landowner. The agreements will require or
authorise the landowner to carry out positive environmental management and/or
rehabilitation actions in respect of the land. Management actions carried out under a
biobanking agreement are exempt from the requirement for development consent or
environmental assessment under the Environmental Planning and Assessment Act 1979.
33
It surveyed examples from wetland banking in the US, Germany, the Netherlands, the United
Kingdom, Victoria and New South Wales. For more recent discussions of the use of biodiversity offsets in
these and other jurisdictions, see the IUCN paper (footnote 1) and McKenney, B. (March 2005)
Environmental Offset Policies, Principles and Methods. A review of Selected Legislative Frameworks,
Biodiversity Neutral Initiative (www.biodiversityneutral.org).
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Biodiversity credits may be created in respect of past, current and future management actions
carried out on land in accordance with a biobanking agreement. The biobanking assessment
methodology, yet to be established, will set out the management actions for which biodiversity
credits may be created and will be used as the basis for calculating the number and class (if
any) of the biodiversity credits.
Biobanking agreements are to be registered on title to land and generally will have effect as
binding agreements on the owner (and subsequent owners) in perpetuity. Biobanking
agreements may be enforced by any person, by action taken in the Land and Environment
Court. Biobank sites are exempt from land tax. For the purposes of land tax assessment, the
value of a parcel of land is to be reduced by an amount proportionate to the area that is the
subject of a biobanking agreement.
The Biobanking Act establishes a system for trading in biodiversity credits, so that once created
and registered (in a register of biodiversity credits to be established by the Director-General of
the Department of Environment and Conservation), the credit may be transferred to any
person, subject to the regulations. Transfers of biodiversity credits have effect when registered
under the scheme. Part of the funds generated from the sale of the credits are to be held on
trust (in a Biobanking Trust Fund and bank account to be established by the Minister) for the
landowner, who receives this as funding for management actions carried out under their
biobanking agreement.
Once created, a biodiversity credit remains in force unless it is cancelled or retired under the
scheme. A credit cannot be cancelled if it has been transferred to a bona fide purchaser without
notice of the circumstances that are grounds for the cancellation of the credit, e.g. if the
application for the creation of the credit contained materially false or misleading information.
A credit may be retired when it is used as an offset in connection with a development proposal,
retired voluntarily or retired for the purpose of complying with a direction given under the
Biobanking Act. For example, a biobank site owner (or former owner) may be directed to retire
credits if the Minister considers that biodiversity credits were created for a management action
that was not carried out, or not completed, in accordance with the relevant biobanking
agreement.
Under the Biobanking Act, biobanking statements may be issued for development and
activities to which the Environment and Planning Assessment Act applies. An application for
a biobanking statement for a development must include an assessment of the impact, or likely
impact, of the development on biodiversity values. The Biobanking Act does not specify
details as to what form this assessment will be required to take. If the development is likely to
impact on biodiversity values, developers can:
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Biodiversity offsets and environmental compensation in New Zealand: Where to from here?
• propose offset works to minimise biodiversity loss or establish their own biobank site to
generate credits;
• purchase or retire biodiversity credits to offset the impact or likely impact; and/or
• change the project so that no biodiversity loss occurs.
The Biobanking Act recognises that biodiversity loss should be avoided and/or minimised
before considering the use of offsets, as the Director-General may refuse to issue a biobanking
statement if the developer has not demonstrated that all cost-effective onsite measures to
minimise the impact of the development on biodiversity values are being, or will be, carried
out.
Ultimately, a biobanking statement may be issued only if the development will improve or
maintain biodiversity values. The statement may be issued subject to conditions, including as
to the onsite measures to be carried out to minimise biodiversity loss or the retirement of
biodiversity credits.
Western Australia
In January 2006, the Western Australia Environmental Protection Authority (EPA) published a
34
position statement on environmental offsets.
A position statement is issued by the EPA
under the Environmental Protection Act 1996. Position statements set out the overriding
principles which the EPA would refer to when giving advice to the government, the public,
proponents, and decision makers to clarify their responsibilities in relation to managing
particular environmental issues.
The EPA was concerned that various offset policies and approaches were being developed and
used across all areas of environmental regulation in Western Australia without common
overarching principles to guide the use of offsets. Offsets are defined in the Statement as:
…“environmentally beneficial activities undertaken to counterbalance an adverse
environmental impacts, aspiring to achieve no net environmental loss or a net
environmental benefit”.
From the EPA’s perspective, offsets should only be viewed as an environmental impact
management tool and not a “project approval” negotiation tool. Offsets should only be used
when all other options (i.e. avoidance, minimisation, rectification, and reduction, in order of
preference) have been properly addressed. Offsets cannot be a substitute for normal
environmental management responsibilities.
34
Environmental Protection Authority (Government of Western Australia), Environmental Offsets –
Position Statement 9, January 2006.
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The statement distinguishes between direct offsets and contributing offsets. A direct offset is
any environmentally beneficial activity undertaken to counteract an adverse environmental
impact with the goal of achieving no net loss or a net environmental benefit. Examples of
direct offsets include ecosystem restoration, rehabilitation, re-establishment activities or
pollution sequestration. Direct offsets may not be available in every circumstance.
Contributing offsets are any environmentally beneficial activities undertaken to complement
the direct offset activity. They include protection mechanisms but also management,
education, research, removal of threats or other activities having a proven environmental
benefit – or contributions to an approved bank, credit trading scheme or trust fund.
The statement recommends that offsets should be used with the aspirational goal of achieving
a ‘net environmental benefit’, rather than maintaining the environment. The use of offsets
should be guided by the following principles:
•
environmental offsets should only be considered after all other reasonable attempts to
mitigate adverse impacts have been exhausted;
•
an environmental offset package should address both direct offsets and contributing
offsets;
•
environmental offset and impact should ideally be ‘like for like or better’;
•
positive environmental offset ratios should apply where risk of failure is apparent (the size
of the offset to impact ratio should be greater than one to one and be proportional to both
the importance of the environmental asset being impacted and the risk that the offset may
not achieve a net environmental benefit);
•
environmental offsets must entail a robust and consistent assessment process;
•
environmental offsets must meet all statutory requirements;
•
environmental offsets must be clearly defined, transparent and enforceable, and
•
environmental offsets must ensure a long lasting benefit.
The EPA’s advice in this area differentiates its approach in terms of the type of environmental
asset that is being dealt with. In relation to critical assets which represent the state’s most
important environmental assets, the EPA notes that its advice will adopt a presumption against
approval, however, where projects are approved by the State Government, the EPA states that
approval should be conditional on the consideration of onsite impact mitigation and
development and implementation of an acceptable offsets package for significant residual
adverse impacts. The EPA advises that the project proponent should develop an
environmental offset package using advice from relevant environmental agencies and applying
the principles in a position statement.
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Biodiversity offsets and environmental compensation in New Zealand: Where to from here?
16
In relation to high value assets, which represent environmental assets that are in good to
excellent condition, are considered valuable by the community and/or the government but are
not identified as critical assets, the EPA advises that proposals and offset activities for these
assets may be referred to and assessed by the EPA on a case-by-case basis. The EPA advises
that its Guidance Statement 33, Environmental guidance for planning and development, would be a
useful resource for proponents when considering the suite of pertinent environmental assets.
In relation to low to medium value assets, which are those assets that are in less than good-toexcellent condition, the EPA advises that offset activities do not need to be addressed through
the EPA processes but would be dealt with by relevant government agencies.
35
The EPA is shortly to release a draft Guidance Document on environmental offsets.
Guidance Documents are issued by the EPA to assist proponents, and the public generally, to
understand the minimum requirements that the EPA expects to be met during the assessment
process.
South Australia
The South Australian Native Vegetation Act 1991 and the Native Vegetation Regulations 2003
including provisions requiring the clearance of native vegetation to be offset by an
environmental gain referred to as a “significant environmental benefit” (“SEB”). The Act
controls the clearance of all native vegetation. Unless exempted under the regulations, all
native vegetation clearance must be approved by the Native Vegetation Council.
An SEB may be achieved through:
•
management of existing remnant native vegetation (e.g. control of pest plants and
animals);
•
restoring degraded native vegetation to a functioning ecosystem;
•
revegetating cleared areas to recreate a functioning ecosystem.
A landholder may undertake the SEB work, or may seek to make a payment to the Native
Vegetation Council (paid into the Native Vegetation Fund), which the Council will use to fund
similar work elsewhere.
In June 2005 the South Australia Department of Primary Industries and Resources and the
Department of Water Land and Biodiversity Conservation issued draft guidelines on how the
35
Sippe, R. Director Strategic Policy, Western Australia EPA. Presentation to Australian Centre for
Minerals Extension and Research (ACMER) workshop: Biodiversity Offsets for the Minerals and Energy
Industries, Perth, 1 April 2007.
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17
introduction of SEB will affect those involved with mining or petroleum activities, which had
previously been exempt from the requirements of the Native Vegetation Act. Proposed
mining/petroleum/geothermal operations should ensure:
•
that there is no practicable alternative that would avoid the clearance of native
vegetation, the clearance of less native vegetation or the clearance of less significant
native vegetation;
•
the retention and enhancement of biodiversity, native vegetation and landscape values;
•
the restoration of native vegetation by land users to maintain and enhance biodiversity,
protect water quality and conserve soil resources;
•
that biological diversity of vegetation is maintained through appropriate land
management practices including a suite of measures from vegetation retention, reestablishment and biodiversity credit trading schemes, through to sustainable use and
production using best practice management techniques;
•
that where native vegetation clearance is unavoidable, measures are undertaken to
counterbalance the loss of that vegetation to achieve a significant environmental benefit
either on the site or within the same region either by works undertaken by the proponent,
or through payment of money into the native vegetation fund (as established under the
native vegetation act);
•
that the clearance of higher value vegetation is offset by a higher significant
environmental benefit), and
•
that the significant environmental benefit supports the highest possible biodiversity
outcomes in terms of quality, position in the landscape, and ongoing management.
36
The intent of significant environmental benefit is twofold:
a.
To replace the immediate environmental values lost through the clearing of native
vegetation; and
b.
To achieve a net gain that contributes to improving the condition of the environment
37
and biodiversity of the region .
36
Government of South Australia, Dept of Water, Land and Biodiversity Conservation: Guidelines for a
native vegetation Significant Environmental Benefit policy; for the clearance of native vegetation associated with the
minerals and petroleum industry, at page 4.
37
Ibid at page 7.
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Biodiversity offsets and environmental compensation in New Zealand: Where to from here?
18
The guidelines recognise that mining and petroleum licensees often do not own the land they
operate on and may not be able to protect or revegetate cleared land. The guidelines propose a
number of alternatives to direct offsets on the same piece of land, including:
•
acquiring land and either managing existing vegetation or undertaking
revegetation/restoration activities;
•
supporting research;
•
removal of threats or managing existing vegetation;
•
working with local government to undertake revegetation on land owned by local bodies;
•
targeted feral animal reduction programmes aimed at assisting the recovery of specific
species.
Clearance of native vegetation might not be approved where the vegetation is of such high
value that sufficient significant environmental benefit to “compensate” for the loss cannot be
38
achieved (e.g. last known remaining stand of critically endangered species or habitat) .
EU Environmental Liability Directive
The EU Environmental Liability Directive
39
goes beyond existing national and European
Commission environmental protection legislation by establishing a framework of
environmental liability requiring the prevention and, where that fails, remediation of various
categories of environmental damage.
The directive refers to damage that has significant adverse effects on achieving or maintaining
favourable conservation status of species and natural habitats protected under EC legislation.
Biodiversity damage is required to be remedied by returning the environment to its baseline
condition; in the case of damage to land, the risk to human health must be removed. If the
harm to biodiversity cannot be reversed, then ‘complementary remediation’ by improvement
of a similar resource or service may be required to be undertaken to the extent the original
resource cannot be fully restored. ‘Compensatory remediation’ may also be required to
compensate society for the loss or enjoyment of the resource or service.
South Africa
In March 2007, the Western Cape Department of Environmental Affairs and Development
Planning released a draft Guideline on Biodiversity Offsets.
40
The guideline states that
biodiversity offsets may need to comprise either single or composite areas to compensate
38
Ibid at page 12.
EU Directive 2004/35/E2 21 April 2004.
40
DEADP, 2007 Provisional Guidelines on Biodiversity Offsets, Cape Town.
39
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adequately for residual biodiversity loss. An acceptable measure of the residual loss is the
starting point for determining an appropriate offset. Offsets are then calculated by multiplying
this measure by a basic offset ratio which is linked to the particular conservation status of the
affected ecosystem:
for ‘critically endangered’ ecosystems there is to be a 30:1 ratio (in such cases an offset
•
would be appropriate in exceptional circumstances only);
•
for ‘endangered’ ecosystems a ratio of 20:1 is required;
•
for ‘vulnerable’ ecosystems a ratio of 10:1 is required; and
•
no offset is required for ‘least threatened’ ecosystems.
The area determined by the basic offset ratio is then adjusted by a range of context-specific
considerations, including:
•
condition of the affected habitat;
•
significance of residual impacts on threatened species;
•
significance of residual impact on special habitats;
•
significance of residual impact on important ecological corridors or process areas; and
•
significance of residual impact on valued biodiversity underpinning ecosystem
services.
For a biodiversity offset to contribute effectively to biodiversity conservation in the Western
Cape, the guideline requires that offsets should be located in an ‘offset receiving area’. These
are areas identified in bioregional or biodiversity plans, or other areas identified as being
targeted for the expansion of protected areas, and/or irreplaceable for meeting conservation
targets.
The guideline notes that the long term security of the offset is vital to achieve the intended
benefits to biodiversity. For this reason, a careful offset design process must be followed,
namely:
•
measuring the residual negative impacts on biodiversity to determine an appropriate
offset;
•
determining the most appropriate type of offset: ‘like for like habitat’, ‘trading up’
(where habitat of a higher priority for biodiversity conservation than that affected by
development is targeted as an offset) or monetary compensation;
•
determining the size of the offset required to compensate for residual negative impacts
on biodiversity and, where the proponent intends to purchase, lease or secure habitat
as an offset, the optimum location of the offset;
•
deciding on the best way to secure the offsets: by gifting to a government agency, by
stewardship agreements or acquiring 'like for like or better' habitat;
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Biodiversity offsets and environmental compensation in New Zealand: Where to from here?
20
developing an Offset Management Plan for management, monitoring, evaluation and
•
auditing of the offset.
Biodiversity offsets in New Zealand - a possible way forward
Despite the guidance by the Environment Court in the JF Investments case and others, the
practice of biodiversity offsets and environmental compensation remains ad hoc and variable as
noted in the 2004 monograph.
In 2004, the World Conservation Union (IUCN) and Insight Investment published a survey of
the use of biodiversity offsets around the world.
41
It reached a number of key conclusions and
made a series of recommendations. In light of the continued application in New Zealand of
biodiversity offsets (and environmental compensation generally) as demonstrated by the
Environment Court decisions discussed in this paper, these conclusions and recommendations
may be useful in the New Zealand context. Additionally, New Zealand may now look to
significant experience in some Australian states on the use of the concept and consider what
lessons can be learned and how experience gained there can be adapted for this country.
The first conclusion of the IUCN paper was that there is a need to clarify the definition and
understanding of the concept. The use of offset vocabulary varies around the world as does
42
the assumption as to the concept within which offsetting activities take place.
The definition
used at the start of this paper (taken from the IUCN paper) makes it clear that integral to the
concept of biodiversity offsets is their proper placement within the “mitigation hierarchy”.
That is:
…developers should first seek to avoid, minimise and mitigate the harm their projects
cause to biodiversity (where “minimise” means to design a project in such a way as to
reduce harm, and “mitigate” means to alleviate the residual harm, to the extent
possible). Only then should they offset the residual, unavoidable impact of the project
on biodiversity. We believe that offsets, if they are firmly anchored within the context
43
of this mitigation hierarchy, do not provide a “licence to trash” the environment.
The 2004 monograph touches on the confusion surrounding the use of the concept in New
Zealand, comparing it with how the concept is understood in other jurisdictions. This
44
confusion was also noted by the Court in JF Investments . Whereas the Environment Court has
generally considered the issue as one of “environmental compensation”, much of the
41
IUCN (The World Conservation Union)¸ Biodiversity Offsets: Views, experience and the business case,
November 2004 (www.iucn.org/themes/business/Biodiversityoffsets).
42
This was identified by Memon et al, (see footnote 2) at page 2.
43
Page 81.
44
JF Investments Ltd, op.cit., at para 13.
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international literature, including the IUCN paper, is concerned with “biodiversity offsets”.
Perhaps this inconsistency has arisen because the Court in many of the cases (Memon, StapyltonSmith, JF Investments) has been dealing with issues of landscape impacts and amenity effects,
which are not specifically biodiversity related.
The focus on biodiversity offsets is also reflected in the offset programmes adopted overseas.
Much of the discussion in other jurisdictions is about how biodiversity values can be assessed
and measured. The objective is then to offset the effects of a development on biodiversity by
securing an equivalent (or better) biodiversity or conservation gain. Such a gain is most readily
achieved where “on-site in kind” values are identified – that is, ‘like for like’, on or close to the
site in question. Conceivably, it can also be achieved by “off-site out of kind” offsets (e.g. the
protection of a lowland podocarp forest in a separate ecological district to ‘compensate’ for the
removal of an area of beech forest). The challenge with biodiversity offsets (of whatever
nature) is to establish a transparent and coherent means of identifying the overall objectives of
adopting such an approach, as well as how the relevant values are measured and protected.
The wider concept of “environmental compensation” on the other hand has to take account of
the fact that a whole range of conservation and amenity values are not susceptible to
“valuation” in a manner similar to biodiversity values. Adverse effects on landscape and
amenity values for example, cannot be “offset” by an equivalent positive effect. It is not
possible to recreate an outstanding landscape for one that has been adversely affected by
development. In this context, it is, however, possible to consider whether positive effects from
the development in question can be offered which result in an overall “gain” such that a
proposal overall is acceptable.
While the examples from other jurisdictions are interesting, it is not simply a matter of
adopting a scheme and imposing it on the New Zealand system. Before environmental
compensation can be developed further in New Zealand there needs to be consideration of
how we want it to work for example should environmental compensation be limited to
biodiversity offsets or should New Zealand continue exploring whether environmental
compensation can be utilised when a proposal results in landscape effects.
The Court in JF Investments has articulated what is in effect a hybrid set of considerations taken
primarily from papers dealing with biodiversity offsets and has adapted them in the context of
landscape and amenity considerations. The question is whether this is the preferable approach,
or whether there should be policy direction that deals with biodiversity offsets as a specific
subset of environmental compensation.
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Biodiversity offsets and environmental compensation in New Zealand: Where to from here?
Part of the issue of definition is the question of what is the appropriate objective for a
biodiversity offset: should the aim be no net loss of biodiversity, net conservation gain or
significant gain?
A second key conclusion from the IUCN paper is about the importance of establishing a metric
or a means of measuring biodiversity value. The paper states:
Limits to the current knowledge of biodiversity and its complexity mean that it is
extremely difficult to establish a “currency” to measure both loss of biodiversity
caused at a development site and the conservation that is needed to offset it elsewhere,
so as to be confident that there is “no net loss”. Much more work is needed in this area
to develop socially acceptable and workable methodologies to measure both
biodiversity loss and gain. Developing such a ‘currency’ may be a challenge, but some
ecologists have indicated that it should be possible to identify measures that give a
reliable indicator of no net loss. Such approaches can also help show where a net
benefit has been achieved.
45
It is beyond the scope of this paper to discuss in any detail the various assessment procedures
and methods which are being used around the world or are currently in development. Some
examples are:
•
In the US wetland banking system, there are a wide range of assessment tools and metrics,
with no standardised approach. This has led to considerable criticism and a concern
whether in many cases the objective of no net loss is being achieved (or at least can be
46
demonstrated to be achieved) .
•
The Victorian Department of Sustainability and Environment has developed the “habitat
hectare” approach.
47
This approach uses observable physical habitat components in an
assessment that is standardised for each ecotype, using its ‘benchmark’. The benchmark
represents the average characteristics of mature stands of native vegetation of the same
community type in a natural or undisturbed condition. Applying the benchmark to the
impact and potential offset sites enables the amount of change in the condition of
biodiversity to be compared. The assessment is made in terms of a site’s condition and
landscape context. Site condition measures how much the site has changed from a
benchmark, by looking at:
•
the presence of large old trees (for woodlands and forests);
45
Page 82.
See example Salzman, J & Ruhl, J No Net Loss – Instrument Choice in Wetlands Protection. Duke Law
School, Research Paper No. 1, September 2005.
47
Parkes, D. et al (2003) Assessing the quality of native vegetation: the habitat hectares approach.
Ecological Management and Restoration 4 (Supplement), s29-s38; Gibbons, P. et al (2007) Offsets for Land
Clearing: No Net Loss or the tail wagging the dog? Ecological Management and Restoration 8(1) 26-31.
46
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•
the amount of tree canopy cover (for woodlands and forests);
•
the amount of logs (for woodland forests);
•
the cover and diversity of the understorey;
•
the presence of appropriate regeneration;
•
how weedy the site is;
•
how much leaf litter there is.
23
Landscape context considers how well the patch of vegetation can cope with natural
fluctuations and disturbances, such as old trees dying, bushfires and floods. It is measured
by the size of the area of vegetation that the site is within, as well as links to, and the
amount of, neighbouring patches of vegetation. Assessments are carried out in accordance
with a detailed Vegetation Quality Assessment Manual and an Index of Wetland
Condition.
•
The South Australian Guidelines set out how Significant Environmental Benefit is to be
48
calculated, based on the area to be cleared and the state of the vegetation.
•
NSW is preparing a draft Biobanking Assessment Methodology and regulations that are
intended to be released in July 2007.
•
The proposed Canterbury (New Zealand) Natural Resources Regional Plan Wetlands
Chapter refers to “wetland offsets” and seeks to manage Canterbury’s wetlands by
enabling development, provided that there is no overall reduction of significant
49
wetlands . No overall reduction allows losses “provided they are offset by equivalent
50
gains” . Appendix WTL1 provides for an assessment methodology for calculating the
conservation value of wetlands.
In respect of this last matter there clearly remains a need for the development in New Zealand
of an appropriate and nationally accepted assessment methodology or methodologies of this
nature. In order to achieve this there needs to be discussion about how wetlands and other
habitats are to be valued. The examples from other jurisdictions may be of assistance in
showing how a valuation methodology can be developed.
A further key conclusion of the IUCN paper was that an offset regime benefits from clear
priorities. Offsets need to be consistent with agreed conservation objectives:
48
See footnote 36.
Environment Canterbury, Variation 1 Proposed Natural Resources Regional Plan, Chapter 7: Wetlands,
publicly notified 3 July 2004, hearings on the chapter are likely to be held during 2007. There do not
appear to be any submissions seeking to change the use of “no overall reduction”.
50
Ibid at pages 7-13.
49
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Biodiversity offsets and environmental compensation in New Zealand: Where to from here?
24
Offsets, at their heart, involve a trade-off. They are predicated on the notion
that biodiversity in one place may be damaged (or even destroyed) in return
for biodiversity protected and conserved elsewhere. In order to make such
trade-offs, however, it is essential to reach broad agreement on conservation
priorities; to assign values that allow a determination of what can be damaged,
51
what needs to be protected; and what can be traded for what.
In New Zealand there are currently a range of policy documents dealing with conservation
priorities and objectives. They include:
52
•
The State of the Environment Report (1997).
•
The New Zealand Biodiversity Strategy (2000).
•
The New Zealand threatened species list.
•
The list of waters of national importance, 2004.
•
Biodiversity inventory and monitoring: A review, 2005.
•
Land environments of New Zealand, 2003.
•
The New Zealand River Environment Classification 2004.
•
Various regional policy statements, regional plans, and district plans throughout the
53
54
55
56
57
58
country.
Whether these documents, taken together, provide sufficient guidance on conservation
priorities and objectives to assist those designing or deciding upon the appropriateness of
biodiversity offsets, should be the subject of discussion.
Until such time as there is clear agreement on these priorities it is unlikely that environmental
compensation in any form will develop further than its current state.
51
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53
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Biodiversity Strategy, Wellington.
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Hitchmough, R., Bull, L., Cromarty, P. (compilers): New Zealand threatened species classification list.
Ooccasional publication, Department of Conservation, Wellington.
55
Chadderton, W.L., Brown, D.J., and Stephens, R.T. (2004): Identifying freshwater systems of national
importance for biodiversity. Department of Conservation, Wellington.
56
Lee, W.G., McGlone, M., and Wright, E. (Compilers) 2005. Biodiversity inventory and monitoring: A review
of national and international systems and a proposed framework for biodiversity monitoring. Department of
Conservation, Wellington.
57
Leathwick, J.R., Wilson, G., Rutledge, D., Wardle, P., Morgan, F., Johnston, K., McLeod, M., Kirkpatrick,
R. (2003) Land environments of New Zealand. Landcare Research, MfE, Auckland.
58
MfE and NIWA, Wellington.
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Pr o ce e d i n g s o f t h e C o n s e r v - V i s i o n C o n f e r e n c e • T h e U n i v e r s i t y o f W a i k a t o
w w w . w a i k a t o . a c . n z / w fa s s / c o n s e r v - v i s i o n